China-led AIIB to block corrupt firms from projects

The Asian Infrastructure Investment Bank (AIIB) will block firms banned by other development banks from participating in its projects, a move that signals the Beijing-based bank’s tough stance towards corruption and fraud.

The AIIB said on Wednesday it had voluntarily adopted the list of sanctioned firms and individuals under the Agreement for Mutual Enforcement of Debarment Decisions (AMEDD), which has been signed by five multilateral development banks including the World Bank and the Asian Development Bank (ADB).

The decision means that almost a thousand companies and individuals blacklisted by the other major development banks, including dozens of Chinese firms, are now also debarred by the AIIB.

“Creating a culture that lives up to our core value to be ‘clean’ is crucial for AIIB because we are ultimately the stewards of taxpayers’ money from all of our members,” Hamid Sharif, Director General, Compliance, Effectiveness and Integrity Unit at the AIIB said in a statement.

The AIIB was launched last year as a “lean, clean and green” bank to finance the building of roads, power plants and other infrastructure in Asia with US$100bn in committed capital.

The AIIB said it has voluntarily adopted the list of firms and individuals debarred by other multilateral developing banks. (Photo: China News Service)

While the Chinese-proposed bank attracted a total of 57 founding members including the UK, Australia and South Korea, the United States and Japan opted not to join over concerns about the newly-established bank’s standards and transparency.

But Sharif, who previously worked for the ADB, said the AIIB was institutionally organised to “react and deal with any suspicions of corruption or unethical behaviour in our projects.”

The AIIB said that, like other multilateral development banks, it would sanction firms and individuals that engage in corruption, theft or other fraudulent behaviour by barring them either permanently of temporarily from participating in projects it finances.

The bank aims to lend US$2.5bn this year, after approving loans worth US$1.73bn last year to energy, transport and urban projects in countries including Myanmar, Bangladesh and Pakistan.

Stricter policy

The AMEDD agreement was first signed in 2010 by the African Development Bank, ADB, European Bank for Reconstruction and Development, Inter-American Development Bank and the World Bank to mutually enforce each other’s debarment decisions.

The World Bank’s debarment list, for instance, currently has 833 companies and individuals from around the world that have been blocked under its fraud and corruption sanctioning policy from participating in the bank’s projects.